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South Asia Investor Review is focused on reporting, analyzing and discussing the economy and the financial markets of countries in South Asia, including Pakistan, Bangladesh and Sri Lanka. For investors looking to invest in emerging markets beyond BRIC countries (Brazil, Russia, India and China), this blog is designed to help international investors looking to learn about investing in South Asia with focus on Pakistan. Riaz has another blog called Haq's Musings at http://www.riazhaq.com

Pakistan Terrorism Toll in 2013

Total number of deaths in Pakistan terrorist violence declined from 6,211 in 2012 to 5,279 in 2013, the lowest since 11,704 fatalities suffered in 2009, according to figures compiled by South Asia Terrorism Portal.

While civilian casualties remained essentially flat--down only slightly from 3007 in 2012 to 3001 in 2013-most of the overall drop from 6,211 to 5,379 occurred in fatalities suffered by the security forces and the terrorists.

Pakistan's biggest province Punjab with more than half the country's population remained relatively unscathed by terrorist violence with just 81 terror casualties in 2013. By contrast, FATA, Sindh, KP and Balochistan suffered disproportionately with 1,716, 1668, 936 and 960 terror-related deaths respectively.

Sindh suffered the most civilian casualties in 2013 with 1285 dead in terrorist attacks. It is followed by 718 in Balochistan, 603 in KP, 319 in FATA and 64 civilian deaths in Punjab. Few terror-related deaths in Punjab, Pakistan's biggest province, appear to be the main reason why terrorism is not seen as a major problem by majority of Pakistanis in public opinion surveys. According to a survey conducted by the International Republican Institute (IRI), 42% respondents said electricity is the single most important issue facing Pakistan; while 21% said inflation, 12% said unemployment, 10% said terrorism and 3% each cited law and order, corruption and poverty as the most crucial issue. Only 1% considered gas/petrol shortage as the single most important issue of Pakistan.

It seems that Pakistan's new prime minister Mr. Nawaz Sharif's agenda is set in response to the surveys like the IRI survey which are heavily influenced by the perceptions of his party's political base in Punjab. While the Sharif government is focusing on the energy and the economy, it is hard to de-link these priorities with action on terrorism. With Pakistan's domestic savings rate at an all-time low of just 4.3% of GDP, the country badly needs foreign direct investment in energy sector to revive the economy. Such foreign investment is unlikely to materialize in a big way without first tackling the scourge of terrorism in the country. What is urgently needed is a comprehensive strategy and a clear plan of action to fight terrorism in a coordinated fashion.

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Here's a WSJ story on Pakistan PM Sharif offering to talk with the Taliban:

...Mr. Sharif has been trying to bring the Pakistani Taliban, known formally as Tehreek-e-Taliban Pakistan, into negotiations since September. The group has said it is interested in dialogue but no substantial talks have taken place while the violence has increased.

Mr. Sharif said Wednesday he formed a four-member committee to steer the renewed effort at talks. For the first time, he also set a condition: that the violence must cease.

"A peaceful solution will be given one last chance," Mr. Sharif told parliament. "Terrorist attacks and peace talks cannot go on together at the same time."

Pakistan's Taliban, which works closely with al Qaeda and is responsible for the killing of thousands of civilians and soldiers, said it welcomed the offer, but would give a detailed response after its leadership meets.

Since Mr. Sharif offered dialogue in September, the group and its allies have blown up a church in the northwestern city of Peshawar, killing more than 80 worshipers, and assassinated an army general. This month it killed at least 34 soldiers in bombings in Bannu in the northwest and in Rawalpindi in the north. Three journalists and three polio vaccination workers were also shot dead in attacks in the southern city of Karachi. On Wednesday, three bombs in Karachi killed at least three paramilitary soldiers.

The Taliban has said that it doesn't accept the Pakistani constitution and wants to turn the country into a strict Islamic emirate.

Senior members of Mr. Sharif's Pakistan Muslim League-N party acknowledge talks may be futile, but that because of political opposition to a major military offensive, they are giving talks with the Taliban every opportunity.

A military operation would have to target the Taliban's base in North Waziristan, part of the tribal areas, where last week there were limited airstrikes, in retaliation for the latest bombings of soldiers. Washington and Kabul have pressed for an offensive in North Waziristan, which is also a sanctuary for al Qaeda and Afghan militants.

Mr. Sharif made clear he wasn't ruling out an offensive. "We have to win this fight, whether by dialogue or by war," he told parliament.

Imran Khan, a lawmaker who has campaigned for peace talks, and whose party rules the militant-plagued northwestern province of Khyber Pakhtunkhwa, said that Mr. Sharif should have secured a halt to U.S. drone strikes in the tribal areas before calling for talks.

In November, a U.S. drone strike killed Pakistan Taliban leader Hakimullah Mehsud. "Dialogue was sabotaged by drones," said Mr. Khan.

The biggest opposition party, the Pakistan Peoples Party, demanded that a deadline be set for the talks. The party's 25-year-old leader, Bilawal Bhutto Zardari, compared the situation to the eve of World War II.

"Support NS [Nawaz Sharif]. I want him to be our Churchill. Unfortunately he is becoming our Neville Chamberlain pursuing policy of appeasement," Mr. Zardari said on Twitter, his usual way of making his views known.

The committee formed for the talks is made up of private citizens who are thought to have influence with the militants, including veteran journalist Rahimullah Yousafzai, former Pakistani ambassador to Kabul Rustum Shah Mohmand, and retired intelligence operative Mohammad Aamir. The current head of Pakistan's Taliban, Mullah Fazlullah, studied at a hard-line religious seminary run by Mr. Aamir's family in northwest Pakistan....

Pakistan's National Internal Security Policy (NISP) Strategy; three tiers of strategy (short-, medium- and long-term); fire-fighting (short-term; police reforms/CT efforts); overhaul of laws and the criminal justice system (short- to medium-term); narrative-building (short-, medium- and long-term). The the policy has been approved by the federal cabinet and some of its salient points have come into the public domain http://newsweekpakistan.com/national-internal-security-policy-and-the-road-ahead/

Civilian casualties have been particularly high, according to the report, totaling around 26,270 deaths in Afghanistan and 21,500 in Pakistan. The study says that most of the civilian casualties in Afghanistan are caused by militant groups, but the number caused by international forces has been increasing since 2012...The turmoil in Pakistan, which has its own Taliban and al Qaeda factions, has become more closely related to that of Afghanistan, with refugees and anti-government militants crossing borders. "It is important for policy makers and others to view the effects and implications of these wars together, because they are so interconnected," said Neta Crawford, the author of the Brown study.

Pakistan has been building out its surveillance capabilities, according to a new report from the UK-based watchdog group Privacy International. The plan includes outlines for collecting broadband internet traffic, phone records, and cellular data transmissions en masse. They're along the lines of programs already run by the NSA and GCHQ, but they could end up even more invasive when combined with Pakistan's existing registration systems. The country requires universal SIM card registration by fingerprint, and maintains a national biometric ID program.

Much of the detail in the report is drawn from a series of contractor requests Pakistan made in 2013. "What the ISI wanted to build," the report says, "was a complete surveillance system that would capture mobile communications data, including Wi-Fi, all broadband internet traffic, and any data transmitted over 3G." It's still unclear how much of that capability Pakistan was able to achieve, but it's clear the country's intelligence agency had ambitions to equal Western surveillance agencies.

More controversially, they often ended up working with Western companies to fulfill those ambitions. To enable "lawful intercept" capability in the phone system, the country turned to familiar telecommunications companies like Ericsson, Alcatel, and Huawei. Records also indicate Pakistan monitored its citizens' web traffic with software from a US company called Narus, and also had working relationships with intrusion software vendors like FinFisher and Hacking Team. While much of that software is already export-controlled, the country seems to have had no problem meeting customs requirements for much of the US and Europe. Germany alone authorized nearly 4 million euro in export licenses to Pakistan specifically for the purpose of "monitoring technology and spyware software."

“We are under pressure from the Treasury to justify our budget, and commercial espionage is one way of making a direct contribution to the nation’s balance of payments”

-Sir Colin McColl, former MI6 Chief

For years public figures have condemned cyber espionage committed against the United States by intruders launching their attacks out of China. These same officials then turn around and justify America’s far-reaching surveillance apparatus in terms of preventing terrorist attacks. Yet classified documents published by WikiLeaks reveal just how empty these talking points are. Specifically, top-secret intercepts prove that economic spying by the United States is pervasive, that not even allies are safe, and that it’s wielded to benefit powerful corporate interests.

At a recent campaign event in New Hampshire Hillary Clinton accused China of “trying to hack into everything that doesn’t move in America.” Clinton’s hyperbole is redolent of similar claims from the American Deep State. For example, who could forget the statement made by former NSA director Keith Alexander that Chinese cyber espionage represents the greatest transfer of wealth in history? Alexander has obviously never heard of quantitative easing (QE) or the self-perpetuating “global war on terror” which has likewise eaten through trillions of dollars. Losses due to cyber espionage are a rounding error compared to the tidal wave of money channeled through QE and the war on terror.

When discussing the NSA’s surveillance programs Keith Alexander boldly asserted that they played a vital role with regard to preventing dozens of terrorist attacks, an argument that fell apart rapidly under scrutiny. Likewise, in the days preceding the passage of the USA Freedom Act of 2015 President Obama advised that bulk phone metadata collection was essential “to keep the American people safe and secure.” Never mind that decision makers have failed to provide any evidence that bulk collection of telephone records has prevented terrorist attacks.

If American political leaders insist on naming and shaming other countries with regard to cyber espionage perhaps it would help if they didn’t sponsor so much of it themselves. And make no mistake, thanks to WikiLeaks the entire world knows that U.S. spies are up to their eyeballs in economic espionage. Against NATO partners like France and Germany, no less. And also against developing countries like Brazil and news outlets like Der Spiegel.

These disclosures confirm what Ed Snowden said in an open letter to Brazil: terrorism is primarily a mechanism to bolster public acquiescence for runaway data collection. The actual focus of intelligence programs center around “economic spying, social control, and diplomatic manipulation.” Who benefits from this sort of activity? The same large multinational corporate interests that have spent billions of dollars to achieve state capture.

Why is the threat posed by China inflated so heavily? The following excerpt from an intelligence briefing might offer some insight. In a conversation with a colleague during the summer of 2011 the EU’s chief negotiator for the Trans-Pacific Partnership, Hiddo Houben, described the treaty as an attempt by the United State to antagonize China:

“Houben insisted that the Trans-Pacific Partnership (TPP), which is a U.S. initiative, appears to be designed to force future negotiations with China. Washington, he pointed out, is negotiating with every nation that borders China, asking for commitments that exceed those countries’ administrative capacities, so as to ‘confront’ Beijing. If, however, the TPP agreement takes 10 years to negotiate, the world–and China–will have changed so much that that country likely will have become disinterested in the process, according to Houben. When that happens, the U.S. will have no alternative but to return to the WTO.”

President Obama, er, slipped into hot water when The Atlantic reportedthat he frequently suggests to his staff that fear of terrorism is overblown, with Americans more likely to die from falls in tubs than from attacks by terrorists.

The timing was awkward, coming right before the Brussels bombings, but Obama is roughly right on his facts: 464 people drowned in America in tubs, sometimes after falls, in 2013, while 17 were killed here by terrorists in 2014 (the most recent years for which I could get figures). Of course, that’s not an argument for relaxing vigilance, for at some point terrorists will graduate from explosives to nuclear, chemical or biological weapons that could be far more devastating than even 9/11. But it is an argument for addressing global challenges a little more rationally.

The basic problem is this: The human brain evolved so that we systematically misjudge risks and how to respond to them.

Our visceral fear of terrorism has repeatedly led us to adopt policies that are expensive and counterproductive, such as the invasion of Iraq. We have ramped up the intelligence community so much that there are now seven times as many Americans with security clearances (4.5 million) as live in Washington, D.C. Meanwhile, Donald Trump responded to the Brussels attacks with crowd-pleasing calls for torture or barring Muslims that even Republican security experts agree are preposterous.

On the same day as the attacks, a paper by James E. Hansen and other climate experts was released arguing that carbon emissions are transforming our world far more quickly than expected, in ways that may inundate coastal cities and cause storms more horrendous than any in modern history. The response? A yawn.

Hansen is an eminent former NASA scientist, but he’s also an outlier in his timing forecasts, and I’m not qualified to judge whether he’s correct. Yet whatever the disagreement about the timeline, there is scientific consensus that emissions on our watch are transforming our globe for 10,000 years to come. As an important analysis in Nature Climate Change put it, “The next few decades offer a brief window of opportunity to minimize large-scale and potentially catastrophic climate change that will extend longer than the entire history of human civilization thus far.”

To put it another way, this year’s election choices may shape coastlines 10,000 years from now. Donald Trump and Ted Cruz have both mocked the idea of human-caused climate change, with Trump suggesting that it is a hoax invented by China to harm the American economy (he now says that last point was a joke).

The upshot is that Brussels survived this week’s terrorist attacks, but it may not survive climate change (much of the city is less than 100 feet above sea level).

Doesn’t it seem prudent to invest in efforts to avert not only shoe bombers but also the drowning of the world’s low-lying countries?

----

Daniel Gilbert, a professor of psychology at Harvard, says that the kind of threats that we evolved to deal with are those that are imminent rather than gradual, and those that involve a deliberate bad actor, especially one transgressing our moral code. Explaining our lack of concern for global warming, he noted,“Climate change is caused by the burning of fossil fuels, not flags.”

In short, our brains are perfectly evolved for the Pleistocene, but are not as well suited for the risks we face today. If only climate change caused sharp increases in snake populations, then we’d be on top of the problem!

Yet even if our brains sometimes mislead us, they also crown us with the capacity to recognize our flaws and rectify mistakes. So maybe we can adjust for our weaknesses in risk assessment — so that we confront the possible destruction of our planet as if it were every bit as ominous and urgent a threat as, say, a passing garter snake.

It is true that Islamic State, the TTP and many other groups have bases inside Afghanistan. Afghan spooks may well provide them some assistance (in 2013 American special forces caught a leader of the TTP on his way to Kabul for secret talks). But the beleaguered government in Kabul, which has lost much of its territory to the Taliban insurgency, is in no position to satisfy Pakistan’s demand that it detain particular militants. They are based in areas where its writ is minimal or non-existent.

Moreover, the Afghan government is beleaguered in part because the Afghan Taliban has itself long enjoyed sanctuary on Pakistan’s side of the border. This week the Afghan government announced that its forces had killed Qari Saifullah Akhtar, a Taliban leader repeatedly captured and released by Pakistan. With many more of the Taliban’s leaders, bomb-makers and indoctrinators beyond the reach of Afghan troops and their allies in NATO, it has proved impossible to defeat the 16-year insurgency. Yet Pakistan has shielded the Taliban because it sees the group as its only ally in Afghanistan, a country it fears is too cosy with India, its arch-rival.

While the army harasses Afghanistan, there is much that Pakistan could do to fight terrorism domestically. A National Action Plan drawn up in the wake of the massacre of more than 130 schoolboys by the TTP in Khyber Pakhtunkhwa in 2014 has not been fully implemented. Regulation and reform of madrassas, religious schools that foster militancy, has been half-hearted. Notorious peddlers of sectarianism remain at large. It does not help that the army wants an even bigger role in domestic security—a source of tension with the civilian authorities. There is nothing Afghanistan can do about all that.

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I am the Founder and President of PakAlumni Worldwide, a global social network for Pakistanis, South Asians and their friends. I also served as Chairman of the NEDians Convention 2007. In addition to being a South Asia watcher, an investor, business consultant and avid follower of the world financial markets, I have more than 25 years experience in the hi-tech industry. I have been on the faculties of Rutgers University and NED Engineering University and cofounded two high-tech startups, Cautella, Inc. and DynArray Corp and managed multi-million dollar P&Ls. I am a pioneer of the PC and mobile businesses and I have held senior management positions in hardware and software development of Intel’s microprocessor product line from 8086 to Pentium processors. My experience includes senior roles in marketing, engineering and business management. I was recognized as “Person of the Year” by PC Magazine for my contribution to 80386 program. I have an MS degree in Electrical engineering from the New Jersey Institute of Technology.
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